West Vancouver developers say amenity contributions need revision

WEST Vancouver staff plan to propose a change to the way they calculate "community amenity contributions" after the election, following complaints from developers.

CACs are fees paid by developers to cover community impacts caused by building a denser development than would be allowed under previous zoning, and pay for a range of improvements to public space or community services.

West Vancouver is one of several municipalities in the region to calculate CACs based on the increase in the value of land caused by a rezoning, except for the area around Ambleside where it's calculated on the amount of extra square feet in a development.

Michael Geller, the developer behind the recently approved Hollyburn Mews multi-family project in West Vancouver, is one of the few developers to raise the issue publicly, arguing the process is unfair and unpredictable, stifling development. Staff say they have heard private concerns from others as well.

"It's often difficult to determine what the increased value is going to be," said Geller. This happened at Hollyburn Mews, where the original CAC was reduced after the market and the estimated sale price of the new homes dropped between 2008 and 2010.

"Secondly, this process creates an inherent uncertainty. If you don't know how much you're going to have to pay the municipality, how do you know how much to pay for the land?"

He also argued the system encourages rezonings as a source of revenue, something that encourages higher density.

Vancouver was the first city to calculate benefits as a portion of uplift, but the practice has since spread across Metro Vancouver, and to West Vancouver about three years ago.

Geller said he doesn't object to paying for community benefits, but wants a predictable process. He said basing the fee on the cost of new services required because of the rezoning, similar to a development cost charge, would be more sensible.

He even said cities can lose out in revenue under this formula, as in one extreme case, where a project in Vancouver's west side resulted in Geller paying no money in CACs because the land after rezoning wasn't worth any more than he paid for it.

Bob Sokol, West Vancouver's director of planning, said that's unlikely to happen in West Vancouver as the municipality takes into account more than just the selling price. "Our policy is generally that we should benefit from the uplift in value, so what we would say is you wouldn't necessarily consider the initial value of what the developer paid for it, we'd be looking at adjacent properties," he said. "Which a developer would argue would be unfair because they're essentially paying for the uplift twice. But that's the policy."

That said, he accepted staff has heard complaints on more than one rezoning, and that there are difficulties for staff. In particular, calculating the sale projects for many developments is hard because there are often few comparable projects in West Vancouver, as was the case for Hollyburn Mews, and market value is variable.

Sokol said staff are considering applying the rules for Ambleside to the entire district, which would see all developments pay a set fee for any additional square footage a rezoning allows. That would make fees more predictable and easier to calculate, he said, but in the end would be determined by the new council.

But it's also a dicey political issue. The amount, as well as how it was calculated, has been a hot debate topic in the last several developments to come before West Vancouver council.

However, councils aren't legally allowed to turn down a development purely over CACs - there have to be other reasons as well, said Sokol. That means developers also have to sign a form agreeing that the contribution is voluntary.

"Which everybody knows is blatantly false," said Geller. Councillors have come to expect CACs, he said, arguing no project could pass without it.

Friday, October 28, 2011

Anyone driving along Cambie Street between King Edward and West 57th, or reading the Real Estate Weekly, cannot help but notice that many of the single family properties along both sides of the street are for sale, or have been sold. According to newspapers, and recent CBC Early Edition reports, single family lots worth $1.2 million have sold for $3.4 million. This has included one ten lot assembly.

Experienced Vancouver developers have watched the situation with a mixture of amusement and surprise. They know that it is a mistake for anyone to buy a Vancouver property based on its potential rezoned value, since the City of Vancouver has a policy of charging a Community Amenity Contribution (CAC) whenever a property is rezoned. In other words, anyone paying $3.4 for a $1.2 million property may also have to pay another million to a million and a half dollars to the city as an amenity contribution.

I do not entirely object to this approach. I think it is reasonable for new development to make a contribution to offset the cost of providing additional amenities. What I do object to, however, is the manner in which the CAC is calculated, and in some instances, the amount of the CAC. The current system creates great confusion and uncertainty which is starting to stifle the type of redevelopment many of us want to see.

A couple of people have told me they don't really understand my concerns, and what I am proposing with respect to the determination of Community Amenity Contributions. In case you too are confused, here's a brief synopsis:

1. As discussed on CBC this morning, the city's current approach appears to be a negotiated CAC payment that takes into account the value of the land before rezoning, and the value of land after rezoning. The city's goal is to receive approximately 75% of the land 'lift' in cash or amenities. Sometimes the values are determined based on Purchase and Sale Agreements; sometimes they are based on appraisals; and sometimes they are negotiated with the City's real estate department

2. One of the drawbacks with this approach is that in some instances the city might not receive any CAC payment if it is determined there is not any increase in value upon rezoning. This was the case with the Lanesborough development in the 3000/3100 block of West 41st, where I did not pay any CAC's since the city's real estate department deemed I had paid too much for the land. In fact, my arrangement with the vendors was to pay them the rezoned value.

3. I am NOT advocating that we return to an approach based on Purchase and Sale Agreements. Nor am I advocating that we retain the current system which determines value using different approaches. On the contrary, I am advocating that the CAC be a pre-established amount on a square foot basis, (that is more reflective of the cost of providing services, not increase in land value) that is published and clearly understood by purchasers and sellers. I understand that this approach is currently in place around SEFC and other parts of the city. I think it is preferable since it creates more certainty, noting it is oftentimes very difficult to assess the rezoned value of a piece of property, years in advance of any development, or when the project is innovative and untested. This certainly was the case with my recent development known as Hollyburn Mews in West Vancouver.

4. Whether the CAC is paid in cash, or provided in amenities within the development is something that the city can negotiate with the developer. However, the value of the benefit will be predetermined

5. In establishing the CAC rate, the city will have to give regard to a number of considerations including: the cost of providing additional amenities; what is reasonable given the desired density, form of development and affordability; and finally, the value of the land under its current zoning. This latter point is important since if the residual value of the land for multi-family (after paying the CAC) is lower than for single family development, the desired redevelopment will not occur.

6. By way of example, the city might desire a CAC for the Cambie Corridor at $50 per square foot. However, if this results in a residual land value that is lower than the value as a single family lot, most owners will not bother with a rezoning. If it is $20 per square foot, then rezonings may be more likely. The challenge is to come up with a CAC rate that is sufficient to partially cover the cost of new amenities, but not so high as to deter rezoning and redevelopment

As the city seeks to encourage the transformation of single family lots to various forms of higher density multi-family development, it will be necessary to remove some of the uncertainties related to CAC's. I believe fixed CAC's, along with new forms of 'pre-zoning' are the way to go. This will hopefully help avoid the confusion and misunderstanding that has resulted in some people paying millions of dollars too much for the Cambie Street properties, which could well affect the timing and success of future redevelopment.

While I should be writing about the unfairness of calculating Community Amenity Contributions based on 'land lift' rather than the cost of providing services; or Occupy Vancouver and the Mayor's comments that the city can't act since it's provincial property, when it has been city property since 1974 when the City acquired the property on a 99 year land lease through a land exchange with the Province..... instead I would like to share some Halloween images.

Unfortunately, too many other obligations will prevent us from having a halloween party this year. However, here are a few pumpkin carving ideas along with some ways to dress up your pumpkins. I hope you are inspired!

Thursday, October 13, 2011

Over the past four decades I have worked with a lot of genuine and authentic people in the development and construction industry. However, as most people who have worked with me are well aware, I have always had a very special relationship with two people in particular....Peter Rezansoff and Tony McGill of ITC Construction (formerly known as Intertech).

I first met Peter and Tony when they worked for Stanzl Construction and I worked at CMHC in 1974. At the time we worked together on a large seniors' housing project in the West End and many of the buildings forming part of the first phase of South Shore False Creek.

In 1981 Peter and Tony joined The Narod Group and we worked together on Mariner Point in False Creek, and a number of projects on Fairview Slopes. We started to work on the Price Waterhouse Centre at Seymour and Hastings, but Narod's Receiver put an end to to that!

In 1983, Intertech was formed and was selected by Richard Henriquez to build his very innovative Sylvia Hotel expansion and Apartment Tower. Shortly thereafter, we started to work together on a long list of projects. These included the Discovery at 1600 Howe Street; 888 Pacific Avenue; all the apartment buildings and hotel renos/expansion at Bayshore; Elm Park Place at West 41st and Larch, and The Cornerstone at UniverCity.

To meet Peter and Tony, you would never believe that together they created one of the largest residential construction companies in Western Canada. They are so very unassuming. (In fact, the only photo I could find on-line is the one above of Peter playing the accordian) People who have worked with ITC often comment that it feels like a family business, and not just because Peter's daughters and Tony's nephew work there. Many of the staff have worked there for decades and the loyalty of the employees was no doubt one of the reasons that the company has been selected as one of the 50 best managed companies in Canada for seven years running.

Yesterday I received a Press Release announcing some changes at the company. Given my longstanding relationship with ITC, I have decided to reprint it below. I want to wish Peter and Tony all the best in their new roles. I also want to wish Doug MacFarlane, the new president all the best, although both he and I know Peter and Tony are not going to fade into the woodwork....if you'll pardon the pun.

NEWS RELEASE

New Leadership for One of Western Canada’s Largest Residential High Rise Builders Vancouver, B.C. – October 12, 2011 –

After nearly three decades in the construction business, the founders of ITC Construction Group, Peter Rezansoff and Tony McGill, are passing the torch to the next generation. Management changes will see current ITC executive vice-president and COO Doug MacFarlane become president and CEO and the founders become directors of the company.

ITC got its start building high-rise condominiums in Vancouver’s West End and has played an integral role in shaping the city into North America’s most livable and lived-in-city. Over the years, it has developed a reputation for being able to execute projects by finding the right solutions. ITC’s ability to deliver projects consistently on budget and on time has made it a valued partner for developers during economic downturns.

ITC is known in the industry as the ‘developer’s builder’. The company has been at the forefront of the move towards more sustainable and compassionate housing. It was one of the first builders to embrace green principles on a major scale, including pioneering the use of geothermal heating and cooling. ITC has also helped build affordable rental housing in Vancouver’s downtown east side.

“Strong ethical leadership, innovative solutions and experience have positioned ITC to move forward with the best management team in the company’s history,” Peter Rezansoff says.

He becomes chairman of the board of directors, which includes co-founder Tony McGill, former Bentall Corporation chairman John D’Eathe and former managing director of Global Enterprises, ATCO Group, Michael Shaw. Summary of new appointments: ·

Doug MacFarlane has been appointed president and CEO. He has been in a leadership role with ITC for the past 15 years and was responsible for the long-term strategy and day-to-day operations. He has a diverse background with experience in residential, commercial and civil construction. Al Stowkowy has been appointed Executive Vice President Alberta Division. The former COO and president of Stuart Olson will lead the company’s Alberta operations from the Calgary office. ·

Brad Burnett has been appointed Director of Business Development, Alberta and BC. Brad has more than 12 years experience in estimating, contract negotiation and cost analysis in both the Vancouver and Calgary construction markets. He is also a Gold Seal Certified Estimator.

Established in 1983, ITC is one of the most recognized multi-residential construction companies in Western Canada. It has been recognized as one of Canada’s 50 best managed companies for seven consecutive years, one of British Columbia’s top 100 companies and one of B.C.’s top three general contractors. In addition, ITC has received numerous awards such as the VRCA Landmark Award for the Woodward’s Project and Contractor Gold Award for Millennium Water in 2010.

The company has expanded into the Calgary market where it is the most active high-rise condominium builder in the city. The company maintains a regional office in the Calgary, where its projects include the Stella, Nova and Luna Towers, as well as Louise Station. ITC is also making inroads into the US Pacific Northwest market.

Wednesday, October 5, 2011

Recently, Sandy Garossino announced her decision to run for Vancouver City Council.

I do not personally know Ms. Garossino, but she strikes me as a thoughtful, intelligent and community spirited person. I am interested in learning more about her positions on the variety of issues that come before a City Council.

Her challenge, however, is to get her message out to me and the broader public. Having participated in the last municipal election as a Council candidate, I can tell you that far too often, the media focus much too much on the Mayoral candidates, to the exclusion of the Council candidates, even those running for the major parties (let alone independents).

Indeed, the fringe Mayoral Candidates often get more opportunity to speak to larger public gatherings than Council candidates for the established parties.

Today most of us know very little about the council candidates, other than the incumbents. (To be truthful, we know very little about a few of them as well!)

And while some candidates may become ‘world famous’ on Frances Bula's blog, or a few other political blogs, we won’t get to read about most of them in the daily newspapers or hear or see them on radio or television.

To get exposure as an independent candidate is probably even more challenging, unless you have a lot of money to spend, or are surrounded by people who excel at social media. I suspect that Ms. Garassino may hope to have a bit of both.

During the last election there were a couple of strong independent candidates. But most of us never learned about them, or paid much attention to them, until it was too late.

Ms. Garossino has a head start as a result of her name recognition associated with the casino. This will be a positive for some voters, and a negative for others.

However, she will have to wean voters off their addiction to ‘slate voting’, and convince them that they should vote for the best candidates, regardless of party affiliation.

For my part, I intend to do just this. I’ll be voting for a Green Candidate for Park Board, and some Vision Candidates for Council, in addition to many of the NPA candidates. I will happily support worthy independent candidates for Council, Park and School Boards, but need to learn more about their positions.

I offer Ms. Garossino, and any other credible independent candidates, along with the party candidates for Council, Park and School Board my best wishes in getting their messages out.

Sunday, October 2, 2011

On October 1, Heritage Vancouver organized another Laneway Housing Tour to allow participants to see a new flock of laneway housing around Vancouver. Six houses were on display, however two 'beautifully crafted lane and coach houses' by Lanecraft were not finished. While this allowed visitors to examine how these little houses are built, they could not fully appreciate how the new houses will relate to the existing older house on the lot, or other houses and garages along the street.That being said, the other houses were most interesting and allowed visitors to appreciate what works, and what doesn't work when it comes to the city's laneway housing program.

As a general comment, I believe that laneway houses can be designed to fit into a neighbourhood, provided the narrower (33') lots have a minimum 120 foot depth. There is no doubt that it is easier to create a successful laneway unit on a corner lot, or lots that are 50 feet or wider.However, what the tour did not offer was a chance to see single level 'cottage-style' laneway houses, which is what I believe many potential homeowners want to build, and what many neighbours would be happier to have in their neighbourhood.

Regular readers of this blog will be aware that this is the type of housing I would like to build, especially using pre-fabricated modular housing. Unfortunately, such units are likely to protrude further into the rear yard of 33' lots; however they could be built on lots 130' in depth or more.The following are some images of what I saw travelling around the city. In many instances, the exterior design of the new houses relates well to the existing homes. However, in many instances, the houses do seem to 'feel' too large, especially when the garage is integrated into the new house. This is generally done because the zoning regulations require that the second floor cannot be more than 60% of the ground floor including garage. This is what makes the units 'one and a half' rather than 'two storey' in height. However, from looking at these photos, I would say that most people would describe many of these houses as two storeys.A couple of other comments.

As I noted when I last wrote about laneway housing, it is obvious to me that many homes are being designed so that the garages can become living space in the future. Well this might seem clever, I fear that it could compromise the success of the program as residents are required to park on the street, rather than in a garage. (As many readers may recall, while I urged Vancouver City Council to require a second parking space for lots with laneway houses, this idea was rejected. As a result, some lots could have three units...a main house, a basement suite, and a laneway house, with no 'off-street parking'.

Secondly, I found that some of the interior plans are much more successful than others. As I discovered on the first tour, some of these 500 square foot units have gigantic refrigerators and stoves when smaller, more compact appliances are available and might be more appropriate. To my mind, the more successful units offer one large living/dining/kitchen areas, rather than two smaller areas.

Some of the houses on the tour had the living area at grade and the bedroom(s) above; others havebedroom(s) at grade, and the living areas on the upper floor with an outdoor space over the garage. Both seem to work for the younger renter; however, neither is really suitable for an 85 year old granny who might want to live in this type of unit on a property owned by a family member.I hope this is helpful to those of you who are interested in building a laneway house. I am pleased to announce that Laneway Cottages Inc., which I created two years ago to build laneway housing in Vancouver will soon start designing and building houses in the city, working with an established modular housing company, and Trasolini Chetner, an established westside builder, who is also building my Hollyburn Mews project in West Vancouver. One advantage of modular building is that it can be completed in weeks, rather than months.... Contact me for more details at geller@sfu.ca.